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TFM Sunrise Update Oct 21, 2020

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Corn futures made new highs overnight led by the nearby Dec 2020 contract getting to 4.12-1/2 on gains of 3-3/4 cents. Dec 2021 is sitting at 4.00 and everything in between is 4.16 to 4.17-1/2. For the nearby Dec, the relative strength index, with a reading over 70 is fast approaching overbought levels. However, the trend is clearly higher and exhibiting price discovery to the upside. The next objective is viewed at 4.13-3/4. Weekly Ethanol Stats will be out today followed by Weekly Exports tomorrow. Demand has been supportive, so these routine reports should keep the market underpinned and favor the funds who are net long well over 200,000 corn contracts, holding an estimated 228,000. A weakening in the dollar is also noted.

As harvests continue at a rapid place in essentially every major producing state, 2020/21 U.S. corn production is maintained at 14.72 billion bushels; national-level harvested area is tentatively kept at 82.8 million acres, nearly 300 thousand acres above the latest USDA estimates; in its latest October USDA report. USDA fractionally lowered its yield expectation to 178.4 bushels per acre. The latest Reuters Poll of Analysts for Oct 9 placed U.S. corn production at 14.8 billion bushels, with yield at 177.7 bushels per acre.


Soybean futures were up as much as 10-1/2 cents overnight to 10.74-1/2 (Nov) as row crops stay in an elevation phase while countering typical season harvest price pressure.As harvests continue at above-average pace 2020/21 U.S. soybean production is maintained at 4.27 billion bushels; the USDA kept soybean yield estimates at 51.9 bushels per acre in its October Crop Production data. A poll of Analysts saw soybean production at 4.26 billion bushels, with yield at 51.3 bushels per acre. Nov beans are closing in on the recent high of 10.79-3/4 from two weeks ago; Jan is step-for-step with Nov while targeting 10.77. New highs were forged in soymeal futures, and soyoil has regained last week's losses.Managed Money is net long an estimated 247,000 soybeans; 91,000 lots of soymeal, and; 81,000 soyoil.


Winter wheat futures maintain a bullish posture heading into today as a lower dollar and higher row crops provide outside market support. Wire story reports Chicago-traded wheat futures have rallied to near six-year highs on strong global demand and unfavorable planting conditions in some major exporters, despite the expectation for record-large stockpiles by mid-2021. KC wheat contracts made another round of new highs overnight on gains of 5 to 6 cents. Chicago wheat was up 4 while testing their highs; And, Mpls wheat was up 2. The trend is higher as fund managers remain active buyers and open interest increases to its highest level since March. Russia has seen some needed rain, but the forecast is not wet enough to stem the tide of added weather premium as the bulls argue a lack of emergence and early growth ahead of dormancy. Managed Money is net long an estimated 66,000 contracts of SRW Wheat. Tender Activity shows Sudan seeking 1.0 million tons of wheat through U.S. assistance; Tunisia seeks 50,000 tons of optional-origin wheat; and, Taiwan seeks 88,000 tons of U.S. wheat.


Cattle futures are called steady to higher as buyers take advantage of the value opportunity left from the recent price drop. Look for stagnant cash trade to cap rally attempts, though. Light cash trade developed late Monday at $106/cwt, down $2 to $3 from last week. We'll see what the today's Fed Cattle Exchange brings, and look for the bulk of activity to occur late in the week as the trade awaits the release of the latest Cattle on Feed report Friday afternoon. Meanwhile, yesterday's positive closes posted reversals in Live cattle, and improved the technical picture in feeders could lure some short covering going into the COF report.


Lean hog calls are mixed with a weaker tone after Dec failed to stay above the 70.00 resistance barrier. The CME Lean Hog Index, at 78.27 is leveling off after experiencing its first negative day since Sept 1, so the Dec contract may be forming a correction. Chinese hog prices also seem to be stabilizing, which will be worth watching into 2021.

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